Mobile Song Fees Should Drop — Universal Music CEO

James Quintana Pearce

Nov. 29, 2006 - 12:12 AM PDT
Nov. 29, 2006 - 12:12 AM PDT

Reuters is reporting that Universal Music Group CEO Doug Morris has said that “cellphone providers need to cut the price of wireless song downloads if they want the market for such services to grow”, although there’s nothing in the article to suggest that Universal plans to reduce the license fees it charges operators. I don’t know how much UMG charges, but labels in general “are understood to have set wholesale prices for carriers of between $1 and $1.40 per track–significantly higher than the estimated $0.65 to $0.75 they are charging Internet music stores like iTunes”, which is why carriers can’t offer tracks for 99c unless they make a loss — such as Amp’d has decided to do. Admittedly the mark-up on music stores like Sprint to hit the $2.50 mark is pretty steep, but a $1.99 figure is pretty reasonable if it includes data. If the prices are going to come down to compete with the 99c online stores (and I agree with Morris that they will have to at some point) the labels are going to have to lower the licensing costs, and carriers are going to have to reduce the money required to cover the data…which is likely to happen with the new networks.